Republic of the Philippines

SUPREME COURT
Manila
SPECIAL FIRST DIVISION
G.R. No. 127598 February 22, 2000
MANILA ELECTRIC COMPANY, petitioner,
vs.
Hon. SECRETARY OF LABOR LEONARDO QUISUMBING and MERALCO EMPLOYEES and WORKERS ASSOCIATION
(MEWA), respondent.
RESOLUTION
YNARES-SANTIAGO, J.:
In the Decision promulgated on January 27, 1999, the Court disposed of the case as follows:
WHEREFORE, the petition is granted and the orders of public respondent Secretary of Labor dated August 19, 1996
and December 28, 1996 are set aside to the extent set forth above. The parties are directed to execute a Collective
Bargaining Agreement incorporating the terms and conditions contained in the unaffected portions of the Secretary of
Labor's orders of August 19, 1996 and December 28, 1996, and the modifications set forth above. The retirement fund
issue is remanded to the Secretary of Labor for reception of evidence and determination of the legal personality of the
MERALCO retirement fund.1
The modifications of the public respondent's resolutions include the following:

January 27, 1999 decision Secretary's resolution

Wages - P1,900.00 for 1995-96 P2,200.00

X'mas bonus - modified to one month 2 months

Retirees - remanded to the Secretary granted

Loan to coops - denied granted

GHSIP, HMP and

Housing loans - granted up to P60,000.00 granted

Signing bonus - denied granted

Union leave - 40 days (typo error) 30 days

High voltage/pole - not apply to those who are members of a team

not exposed to the risk

Collectors - no need for cash bond, no

need to reduce quota and MAPL

CBU - exclude confidential employees include

Union security - maintenance of membership closed shop

Contracting out - no need to consult union consult first

All benefits - existing terms and conditions all terms

Retroactivity - Dec. 28, 1996-Dec. 27, 199(9) from Dec. 1, 1995

Dissatisfied with the Decision, some alleged members of private respondent union (Union for brevity) filed a motion for
intervention and a motion for reconsideration of the said Decision. A separate intervention was likewise made by the
supervisor's union (FLAMES2) of petitioner corporation alleging that it has bona fide legal interest in the outcome of the
case.3 The Court required the "proper parties" to file a comment to the three motions for reconsideration but the Solicitor-
General asked that he be excused from filing the comment because the "petition filed in the instant case was granted" by the
Court.4 Consequently, petitioner filed its own consolidated comment. An "Appeal Seeking Immediate Reconsideration" was also
filed by the alleged newly elected president of the Union. 5 Other subsequent pleadings were filed by the parties and
intervenors.
The issues raised in the motions for reconsideration had already been passed upon by the Court in the January 27, 1999
decision. No new arguments were presented for consideration of the Court. Nonetheless, certain matters will be considered
herein, particularly those involving the amount of wages and the retroactivity of the Collective Bargaining Agreement (CBA)
arbitral awards.
Petitioner warns that if the wage increase of P2,200.00 per month as ordered by the Secretary is allowed, it would simply pass
the cost covering such increase to the consumers through an increase in the rate of electricity. This is a non sequitur. The Court
cannot be threatened with such a misleading argument. An increase in the prices of electric current needs the approval of the
appropriate regulatory government agency and does not automatically result from a mere increase in the wages of petitioner's
employees. Besides, this argument presupposes that petitioner is capable of meeting a wage increase. The All Asia Capital
report upon which the Union relies to support its position regarding the wage issue cannot be an accurate basis and conclusive
determinant of the rate of wage increase. Section 45 of Rule 130 Rules of Evidence provides:
Commercial lists and the like. Evidence of statements of matters of interest to persons engaged in an occupation
contained in a list, register, periodical, or other published compilation is admissible as tending to prove the truth of
any relevant matter so stated if that compilation is published for use by persons engaged in that occupation and is
generally used and relied upon by them therein.
Under the afore-quoted rule, statement of matters contained in a periodical, may be admitted only "if that compilation is
published for use by persons engaged in that occupation and is generally used and relied upon by them therein." As correctly
held in our Decision dated January 27, 1999, the cited report is a mere newspaper account and not even a commercial list. At
most, it is but an analysis or opinion which carries no persuasive weight for purposes of this case as no sufficient figures to
support it were presented. Neither did anybody testify to its accuracy. It cannot be said that businessmen generally rely on news
items such as this in their occupation. Besides, no evidence was presented that the publication was regularly prepared by a
person in touch with the market and that it is generally regarded as trustworthy and reliable. Absent extrinsic proof of their
accuracy, these reports are not admissible.6 In the same manner, newspapers containing stock quotations are not admissible in
evidence when the source of the reports is available. 7 With more reason, mere analyses or projections of such reports cannot be
admitted. In particular, the source of the report in this case can be easily made available considering that the same is necessary
for compliance with certain governmental requirements.
Nonetheless, by petitioner's own allegations, its actual total net income for 1996 was P5.1 billion. 8 An estimate by the All Asia
financial analyst stated that petitioner's net operating income for the same year was about P5.7 billion, a figure which the Union
relies on to support its claim. Assuming without admitting the truth thereof, the figure is higher than the P4.171 billion allegedly
suggested by petitioner as its projected net operating income. The P5.7 billion which was the Secretary's basis for granting the
P2,200.00 is higher than the actual net income of P5.1 billion admitted by petitioner. It would be proper then to increase this
Court's award of P1,900.00 to P2,000.00 for the two years of the CBA award. For 1992, the agreed CBA wage increase for rank-
and-file was P1,400.00 and was reduced to P1,350.00; for 1993; further reduced to P1,150.00 for 1994. For supervisory
employees, the agreed wage increase for the years 1992-1994 are P1,742.50, P1,682.50 and P1,442.50, respectively. Based on
the foregoing figures, the P2,000.00 increase for the two-year period awarded to the rank-and-file is much higher than the
highest increase granted to supervisory employees. 9 As mentioned in the January 27, 1999 Decision, the Court does "not seek to
enumerate in this decision the factors that should affect wage determination" because collective bargaining disputes particularly
those affecting the national interest and public service "requires due consideration and proper balancing of the interests of the
parties to the dispute and of those who might be affected by the dispute." 10 The Court takes judicial notice that the new
amounts granted herein are significantly higher than the weighted average salary currently enjoyed by other rank-and-file
employees within the community. It should be noted that the relations between labor and capital is impressed with public
interest which must yield to the common good.11 Neither party should act oppressively against the other or impair the interest
or convenience of the public.12 Besides, matters of salary increases are part of management prerogative. 13
On the retroactivity of the CBA arbitral award, it is well to recall that this petition had its origin in the renegotiation of the
parties' 1992-1997 CBA insofar as the last two-year period thereof is concerned. When the Secretary of Labor assumed
jurisdiction and granted the arbitral awards, there was no question that these arbitral awards were to be given retroactive
effect. However, the parties dispute the reckoning period when retroaction shall commence. Petitioner claims that the award
should retroact only from such time that the Secretary of Labor rendered the award, invoking the 1995 decision in Pier 8
case14 where the Court, citing Union of Filipino Employees v. NLRC,15 said:
The assailed resolution which incorporated the CBA to be signed by the parties was promulgated on June 5, 1989, the
expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity should be agreed upon by the
parties. But since no agreement to that effect was made, public respondent did not abuse its discretion in giving the
said CBA a prospective effect. The action of the public respondent is within the ambit of its authority vested by
existing law.
On the other hand, the Union argues that the award should retroact to such time granted by the Secretary, citing the 1993
decision of St. Luke's.16
 Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the previous
CBA, contrary to the position of petitioner. Under the circumstances of the case, Article 253-A cannot be properly
applied to herein case. As correctly stated by public respondent in his assailed Order of April 12, 1991 dismissing
petitioner's Motion for Reconsideration
Anent the alleged lack of basis for the retroactivity provisions awarded; we would stress that the provision
of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreements by and between the
parties, and not arbitral awards . . .
Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards
issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public
respondent is deemed vested with plenary and discretionary powers to determine the effectivity thereof.
In the 1997 case of Mindanao Terminal,17 the Court applied the St. Luke's doctrine and ruled that:
In St. Luke's Medical Center v. Torres, a deadlock also developed during the CBA negotiations between management
and the union. The Secretary of Labor assumed jurisdiction and ordered the retroaction of the CBA to the date of
expiration of the previous CBA. As in this case, it was alleged that the Secretary of Labor gravely abused its discretion
in making his award retroactive. In dismissing this contention this Court held:
Therefore, in the absence of a specific provision of law prohibiting retroactive of the effectivity of arbitral
awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein
involved, public respondent is deemed vested with plenary and discretionary powers to determine the
effectivity thereof.
The Court in the January 27, 1999 Decision, stated that the CBA shall be "effective for a period of 2 years counted from
December 28, 1996 up to December 27, 1999." Parenthetically, this actually covers a three-year period. Labor laws are silent as
to when an arbitral award in a labor dispute where the Secretary had assumed jurisdiction by virtue of Article 263 (g) of the
Labor Code shall retroact. In general, a CBA negotiated within six months after the expiration of the existing CBA retroacts to the
day immediately following such date and if agreed thereafter, the effectivity depends on the agreement of the parties. 18 On the
other hand, the law is silent as to the retroactivity of a CBA arbitral award or that granted not by virtue of the mutual agreement
of the parties but by intervention of the government. Despite the silence of the law, the Court rules herein that CBA arbitral
awards granted after six months from the expiration of the last CBA shall retroact to such time agreed upon by both employer
and the employees or their union. Absent such an agreement as to retroactivity, the award shall retroact to the first day after
the six-month period following the expiration of the last day of the CBA should there be one. In the absence of a CBA, the
Secretary's determination of the date of retroactivity as part of his discretionary powers over arbitral awards shall control.
It is true that an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because it
requires the interference and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction. However,
the arbitral award can be considered as an approximation of a collective bargaining agreement which would otherwise have
been entered into by the parties.19 The terms or periods set forth in Article 253-A pertains explicitly to a CBA. But there is
nothing that would prevent its application by analogy to an arbitral award by the Secretary considering the absence of an
applicable law. Under Article 253-A: "(I)f any such agreement is entered into beyond six months, the parties shall agree on the
duration of retroactivity thereof." In other words, the law contemplates retroactivity whether the agreement be entered into
before or after the said six-month period. The agreement of the parties need not be categorically stated for their acts may be
considered in determining the duration of retroactivity. In this connection, the Court considers the letter of petitioner's
Chairman of the Board and its President addressed to their stockholders, which states that the CBA "for the rank-and-file
employees covering the period December 1, 1995 to November 30, 1997 is still with the Supreme Court," 20 as indicative of
petitioner's recognition that the CBA award covers the said period. Earlier, petitioner's negotiating panel transmitted to the
Union a copy of its proposed CBA covering the same period inclusive. 21 In addition, petitioner does not dispute the allegation
that in the past CBA arbitral awards, the Secretary granted retroactivity commencing from the period immediately following the
last day of the expired CBA. Thus, by petitioner's own actions, the Court sees no reason to retroact the subject CBA awards to a
different date. The period is herein set at two (2) years from December 1, 1995 to November 30, 1997.
On the allegation concerning the grant of loan to a cooperative, there is no merit in the union's claim that it is no different from
housing loans granted by the employer. The award of loans for housing is justified because it pertains to a basic necessity of life.
It is part of a privilege recognized by the employer and allowed by law. In contrast, providing seed money for the establishment
of the employee's cooperative is a matter in which the employer has no business interest or legal obligation. Courts should not
be utilized as a tool to compel any person to grant loans to another nor to force parties to undertake an obligation without
justification. On the contrary, it is the government that has the obligation to render financial assistance to cooperatives and the
Cooperative Code does not make it an obligation of the employer or any private individual. 22
Anent the 40-day union leave, the Court finds that the same is a typographical error. In order to avoid any confusion, it is herein
declared that the union leave is only thirty (30) days as granted by the Secretary of Labor and affirmed in the Decision of this
Court.
The added requirement of consultation imposed by the Secretary in cases of contracting out for six (6) months or more has been
rejected by the Court. Suffice it to say that the employer is allowed to contract out services for six months or more. However, a
line must be drawn between management prerogatives regarding business operations per se and those which affect the rights
of employees, and in treating the latter, the employer should see to it that its employees are at least properly informed of its
decision or modes of action in order to attain a harmonious labor-management relationship and enlighten the workers
concerning their rights.23 Hiring of workers is within the employer's inherent freedom to regulate and is a valid exercise of its
management prerogative subject only to special laws and agreements on the matter and the fair standards of justice. 24 The
management cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential
for its operation. It has the ultimate determination of whether services should be performed by its personnel or contracted to
outside agencies. While there should be mutual consultation, eventually deference is to be paid to what management
decides.25 Contracting out of services is an exercise of business judgment or management prerogative. 26 Absent proof that
management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an
employer.27 As mentioned in the January 27, 1999 Decision, the law already sufficiently regulates this matter. 28 Jurisprudence
also provides adequate limitations, such that the employer must be motivated by good faith and the contracting out should not
be resorted to circumvent the law or must not have been the result of malicious or arbitrary actions. 29 These are matters that
may be categorically determined only when an actual suit on the matter arises.
WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED and the assailed Decision is MODIFIED as follows: (1) the
arbitral award shall retroact from December 1, 1995 to November 30, 1997; and (2) the award of wage is increased from the
original amount of One Thousand Nine Hundred Pesos (P1,900.00) to Two Thousand Pesos (P2,000.00) for the years 1995 and
1996. This Resolution is subject to the monetary advances granted by petitioner to its rank-and-file employees during the
pendency of this case assuming such advances had actually been distributed to them. The assailed Decision is AFFIRMED in all
other respects.1wphi1.nt
SO ORDERED.
Davide, Jr., C.J., Melo, Kapunan and Pardo, JJ., concur.
Manila Electric v. Quisumbing Digest
Manila Electric v. Quisumbing
G.R. No. 127598 February 22, 2000

Facts:
Members of the Private respondent union were dissatisfied with the terms of a CBA with petitioner. The parties in this case
were ordered by the Sec. of Labor to execute a collective bargaining agreement (CBA) wherein.The CBA allowed for the increase
in the wages of the employees concerned. The petitioner argues that if such increase were allowed, it would pass off such to the
consumers.

Issue: W/N matters of salary are part of management prerogative

RULING: Yes. There is no need to consult the Secretary of Labor in cases involving contracting out for 6 months or more as it is
part of management prerogative. However, a line must be drawn with respect to management prerogatives on business
operations per se and those which affect the rights of the workers. Employers must see to it that that employees are properly
informed of its decisions to attain harmonious labor relations and enlighten the worker as to their rights.

The contracting out business or services is an exercise of business judgment if it is for the promotion of efficiency and
attainment of economy. Management must be motivated by good faith and contracting out should not be done to circumvent
the law. Provided there was no malice or that it was not done arbitrarily, the courts will not interfere with the exercise of this
judgment.